Insurance Experts Explain Construction Insurance – Part 3

Builder’s Risk insurance is a form of construction insurance designed to protect buildings and structures that are under construction or renovation. In parts 1 and 2 of our 3-part series on the coverage, we discussed what the policy covers, what it excludes, and various aspects of the policy cost. In this last segment, let’s look at:

1. How long does the policy last?
2. Can one extend the policy term?
3. Do I get a refund if I cancel my insurance?
4. What happens on completion of the project?
5. Is Builder’s Risk insurance required by law?
6. When should I buy Builder’s Risk insurance?

• How long does the policy last?

Builder’s Risk insurance, also known as Course of Construction, typically lasts either three months, six months, or 12 months. Coverage generally takes effect on the date of signing all contracts, unless policy provisions state otherwise. And it usually ends on completion of the when the building. Other circumstances upon which coverage will end, include:

• Policy expiration
• When one cancels the policy
• The owner taking possession of the property
• Building occupancy
• Project abandonment
• The project lying idle for 60 days

• Can one extend the policy term?

Yes. If the initial policy term ends before the completion of the project, you can extend it, but usually only once. You can also add more coverage to your policy, and all you need to do is call us at Contractors Liability to discuss these extensions.

• Do I get a refund if I cancel my insurance?

Builder’s Risk insurance is a one-shot construction insurance policy, meaning you will not get any of your paid premiums back if you cancel early.

• What happens on completion of the project?

Construction insurance is temporary, so get permanent property insurance on completion of the project. For a residential project, you will require a Homeowners Insurance policy.  But you must first occupy the home to qualify for coverage. It’s best to make arrangements for the coverage before your Builder’s Risk insurance expires to avoid going without insurance for a period.

• Is Builder’s Risk insurance required by law?

Unlike other types of construction insurance like General Liability and Workers Compensation, Builder’s Risk  insurance is not mandatory. What this means is, the law does not require contractors and property owners to have a Builder’s Risk policy during construction.

However, the coverage is often a requirement in contracts such as loan agreements and independent contractor agreements. If there is financing of your project, the lender usually requires that you, as the contractor or developer, carry Builder’s Risk insurance. It’s also often required to win contracts from local or state governments and large organizations.

• When should I buy Builder’s Risk insurance?

It is advisable to purchase the policy before the project begins. This is since your insurer will only cover labor and material costs incurred after the coverage start date. So, you will not have coverage on any work that takes place unless you have your Builder’s Risk insurance in place.

Why should I purchase my Construction Insurance from BuildersRisk.net?

At BuildersRisk.net we have over 20 years of experience providing financial security and reliability to our clients through Builder’s Risk and property insurance. We aim to provide comprehensive coverage. Our team also provides customized customer service to meet each client’s needs. We achieve this by working with 15 top-notch insurance carriers across all 50 states in America that can deliver policies in less than 1-Hour. Don’t settle for average, give us a call today at 887 960 0221 for construction insurance customized to suit your business needs at affordable rates.